42K x 30 = Baby #2 ?

I’ve had this in my head for a while now… and at this point it’s turned into a weird math problem…..  I’ve shared it with the hubby and my family, and still it seems like a long shot, but maybe if I make myself accountable by blogging about it, I can make it happen.

See, here’s the deal.  I have been wicked stressed lately about my student loans (all $42,000 of them!-which isn’t too bad for paying my way thru college & grad school). I have more than enough on my plate… working full-time, raising our son, renovating our home, and attempting to maintain a household.  Add my recent health-kick that I squeeze in ‘me time‘ and you’d think I’d burst.  But I know that paying off my student loans will lighten the load for us… it would mean that the $$$ I’m putting towards student loans every month could go towards our family.

In addition to being stressed about that, I’m getting the baby bug again.  Avery’s 13 months old and oh man is it a world of difference from months ago.  He’s sleeping, which means I’m sleeping!  He can walk around and entertain himself.  And he is an absolute joy!  There are many more moments of laughter and giggling than of frustration and exhaustion.  I think I could handle another little one, but we’re just not ready yet.  Our house is too small – oh and it’s a mess (when do I have time to clean?!).  We can’t afford it.  Avery’s daycare costs as much as our mortgage (seriously), so it would be like paying for 3 houses!  And I always feel like I don’t get enough time with Avery as it is, so splitting my time between two kiddos would be twice as hard!  But we would like at least one more… someday.  One day.

When that ‘one day’ is depends on lots of factors, but one thing that would really help, would be paying off my student loans.  That would free up lots of $$$ to put towards a more comfortable life… maybe a bigger house… maybe daycare for 2 kids… or maybe for me to stay home more and spend time with our family.  Everything is still up in the air and we’ll figure it out as we go.  But what I do know is that if we want another kiddo, I gotta squash these student loans first!

So I’ve channeled my stress into planning and managing mode.  Everyone is different, but for me, making goals and planning really helps me organize the zillion of things bouncing around in my head that cause the stress.  So here’s how I plan on paying down my student loans…

1. Face Your Debt
   To really know what I’m dealing with, I had to gather all my loans up and write them down in one place.  I knew where they were online and have been paying them, but to line them up in a spreadsheet really brought things into perspective.  Record everything you have… original loan amount, interest rate, payment date, etc.
2. Research Ways to Lower Your Loans & Interest
   I did this a while ago, but worthy to note.  There are a bunch of ways to lower your interest rate, and even have other people pay off your loans.  It depends on your loan servicer, but some have options so simple as paperless billing and automatic debit.  Sign up for them and save.  I lowered my interest rate on all my Sallie Mae loans by setting up automatic debt.  Yah it was only 0.25%, but hey, over years that saves up!   Consider consolidation – I didn’t do this because I have some loans with high and some with low interest rate.  Also try weekly or bi-weekly payments.  I do this with my VSAC loans, as it cuts down on the interest that accrues.
3. Organize & Prioritize
   Take the spreadsheet from #1 and prioritize them.  My strategy is to pay off the highest interest rate loans first (This means I’ll pay less in interest in the long term).  So on the top of my list is the smallest loan with the highest interest rate, then as the list goes, the loan gets smaller until I get to the next lowest interest rate.
4. Budget
   I know my minimum payments due, but how much more can I put towards them?  With my recent raise (Yay!) I can put an extra $300 a month towards student loans.  But I’m not just adding that to my normal monthly payment.  I send that in separately and have it only go towards the top loan on my list – this way I pay off the highest interest rate loan first!
5. Make Goals
   Now that I have a plan, what are my goals?  Well, pay them off ASAP!  But when you have a cloud of $42,000 hanging over your head, that seems eons away!  So, I’m making small goals to reach the final goal.  I’m thinking I can have these paid off by my 30th Birthday (9/26/16).  That gives me just under 3 years to make this happen and would put our kids around 4 years apart (if all goes well).  So, sense family finances are always changing, I made a few upcoming goals: Pay off Loan 1-08(the top of the list) by January 2013.  I’m expecting a holiday bonus to help make that happen.  Then the next loan by April… and so on.  It’ll get harder as I get into the bigger loans, but knowing Baby #2 will be closer with every mini-goal met makes this a fun challenge!
6. Revist Your Plan MONTHLY
   I check in on my loans every week (since I make weekly payments) and update the info (just like a budget).  See how I’m doing on my short term goals.  Having the spreadsheet will also allow me to look back and see the number go down… which will be very rewarding…
   
7. Reward Yourself
   Just seeing the number go down will be rewarding…and it’ll be a fun ‘game’ for me to play…instead of stressing about it!  Have you heard about this site, www.Saveup.com?  You enter you loan info and get points to enter for prizes (gift cards, $100 towards your electric bill, etc).  It’s fun. I haven’t won anything…Yet!

Resources and Related Articles:

• Student loans: 5 steps to pay down your debt (Christian Science Monitor)
• How to Pay Off Student Loans (Real Simple)
• 2 New Ways to Pay Off Student Loans (U.S.News & World Report)
• Student Loans: Paying Off Your Debt Faster (Investopedia)

Do you have student loans?  How are you paying them off? Did finances affect your decision for when Baby #2 comes?